April 17, 2024

"Just the FACTs" is a round-up of news stories and information regarding efforts to combat corrupt financial practices, including offshore tax haven abuses, corporate secrecy, and money laundering through the financial system.

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State of Play:
FACT-Endorsed International Tax Reforms Would Help Address Trade, Budget Concerns

FACT's latest blog by policy director Zorka Milin and policy and communications officer Thomas Georges highlights the often-overlooked connection between President Trump's recent rollout of worldwide tariffs and U.S. corporate tax policy.

The Trump Administration has insisted that its unprecedented tariff policy is aimed at rebuilding the U.S. manufacturing base, which has for decades been eroded by multinational firms seeking lower labor and investment costs abroad. The president himself, however, has acknowledged that trade rules are not the only factor driving the offshoring of U.S. manufacturing: during a White House meeting with the Irish prime minister last month, President Trump expressed concern about the "massive" U.S. trade deficit with Ireland and the fact that Ireland "has got the entire US pharmaceutical industry in its grasp."

What Trump didn't mention is that major U.S. pharma companies, taken together, paid no U.S. tax in 2024 - while several even booked a tax loss in the U.S. - despite making the vast majority of their sales to American patients, who pay some of the highest prices for prescription drugs in the world.

FACT has long advocated for international tax reforms to both more effectively tax the foreign profits of major U.S. multinationals, and to remove incentives for offshoring of factories and jobs. Chief among these reforms is a substantial rework of the U.S. global minimum tax - known as the Global Intangible Low-Taxed Income (GILTI) regime - which currently provides a half-off U.S. tax discount to firms that produce their products in low-tax jurisdictions like Ireland.

These reforms were also the subject of FACT policy director Zorka Milin's latest op-ed in Bloomberg Tax, in which Milin noted that "The US doesn't need to resort to either punishing or joining tax havens such as Ireland - instead, we should start by fixing our America-last tax code." As congressional Republicans resort to cutting popular healthcare and family programs to pay for their proposed extension of the 2017 tax cuts, a better approach would raise hundreds of billions of dollars in new revenue while supporting the Administration's broader goal of reshoring U.S. manufacturing.

FACT in the News

Thomson Reuters: Transparency Hawks - IRS Cuts Will Worsen Tax Evasion, Compliance Gaps

FACT executive director Ian Gary and policy director Zorka Milin were quoted by Thomson Reuters in coverage of upcoming IRS layoffs.

It is likely, said Gary, that staff assigned to audits and enforcement actions against major multinational corporations and wealthy individuals "are going to be potentially first on the chopping block." While specifics remain unclear, "it's fair to surmise that those critical functions of the IRS would be adversely impacted."

Milin added that these "are some of the more complex audits...And we know that some of these cases run into the many billions. It's just not a smart business move to cut these investments that are crucial to raising revenues in a sustainable and fair way."

CNBC: How the IRS layoffs could affect audits and refunds during tax filing season

Zorka Milin also provided comments to CNBC for a televised broadcast on the potential impacts of the Trump Administration's planned IRS staff cuts.

"If we just think about (these cuts) for one minute: if we care about saving money for the government, then going after the part of the government that actually brings in the overwhelming amount of revenue would be among the last things that we would do," said Milin. "Research shows that tax cheating is something that is highly concentrated at the very top of the income distribution. So the top one percent accounts for something like one third of unpaid taxes... and what's worse, (the IRS) will not have the resources to open new audits and open new cases. So the early warning signs are flashing, and we can only expect the problem to continue to grow."

InSight Crime: Organized Crime Cashes In on Record Gold Prices

FACT program director for environmental crimes and illicit finance Julia Yansura was interviewed by InSight Crime on the ways in which criminal groups have capitalized on the rising price of gold.

"What we've seen is increasing involvement from organized crime groups in illegal mining," said Yansura. "When you get a really dramatic increase in the price of gold, that unfortunately plays right into their hands. It means that criminal groups have more money that they can use to buy weapons, to finance operations, to wreak havoc in our various countries."

Bloomberg Law: Businesses Fret Over Scope of Australia Tax-Disclosure Carveouts

FACT policy and communications officer Thomas Georges was quoted by Bloomberg Law in coverage of Australia's planned exemption guidance for the government's new public country-by-country reporting (CbCR) rules.

Georges noted that an "overly-broad exemption regime...would seriously undermine the potential of the new transparency law," particularly with regard to exemptions granted for commercially-sensitive information, a wide category of information that companies are exempt from disclosing for up to five years under the less-stringent EU public CbCR regime.

From Our Members and Allies

Anti-Corruption Data Collective: The Opacity in Real Estate Ownership Index

Read FACT-member ACDC's new report with Transparency International measuring how 24 jurisdictions around the world perform with regard to the collection and availability of real estate data and anti-money laundering (AML) regulation of the real estate sector. Despite the recent finalization of new AML rules for the domestic residential real estate market, the United States ranks third-lowest in overall performance on the new index.

From the report: "Recent years have brought greater awareness of the role played by professionals in the non-financial sector, such as lawyers and real estate agents, in money laundering, corruption and illicit financial flows. And yet, as the Index shows, some countries still allow unregulated professionals to operate in the real estate sector, while supervisory frameworks lack effectiveness. This calls for bold new international commitments to address remaining loopholes."

Unidos U.S.: Sign-on letter urges Congress to halt IRS-ICE agreement threatening taxpayer privacy

FACT recently joined more than 150 organizations in signing a joint letter calling on Congress to end the Administration's inappropriate use of confidential tax data for immigration enforcement and other non-tax purposes.

From the letter: "The confidentiality of tax information is an essential foundation for the functioning of our voluntary compliance system. We urge Congress to exercise its oversight authority to immediately address this urgent issue. Specifically, we respectfully urge Congress to conduct immediate oversight hearings with Treasury, IRS, and DHS leadership; request unredacted copies of the MOU and any implementation agreements; and demand a response from the Treasury regarding these novel and damaging steps to undermine the law as written by Congress."

Recent and Upcoming Events

April 3: 8th Meeting of the Network of Unions for Tax Justice

On April 3, Zorka Milin presented at the Network of Unions for Tax Justice on the U.S' recent withdrawal from the UN Tax Convention, as well as the rejection by the Trump Administration of the OECD's two-pillar global tax deal. The meeting brought together tax experts, union leaders, and civil society experts to discuss global tax reform, corporate accountability, and fair revenue distribution.

April 8: GI-TOC - International Conference in Paris Calls for Greater Action Against Environmental Crimes

On April 8-9, Julia Yansura spoke on the importance of environmental crime-specific anti-money laundering measures at a conference titled, "Security and Development Dialogue for Advancing Multilateral and Multi Stakeholder Responses to Environmental Crime." The conference was organized by the Global Initiative against Transnational Organized Crime (GI-TOC) through its ECOSOLVE initiative, and hosted by the government of France.

Yansura's panel provided a forum for stakeholders to share experiences and compare approaches in addressing environmental crime, and included experts from France, Brazil, Indonesia, Germany, South Africa, and the Democratic Republic of the Congo.

April 24: Safeguarding Domestic Resources in the Post Global Aid World

FACT will co host an panel discussing the impact of recent geopolitical changes on the pursuit of effective domestic resource mobilization in Africa alongside the Africa Center for Energy Policy (ACEP) and IMANI at the Open Gov Hub in Washington next week.

Register for this hybrid in-person and virtual event here.

May 7: 2025 OECD Forum on Responsible Mineral Supply Chains

On May 7, Julia Yansura will be speaking at the OECD Forum on Responsible Mineral Supply Chains on a panel titled Following the Money, Tracing the Mercury, and Responding to Local Voices: Exploring New and Under-Utilized Solutions to Address Illegal Gold Mining in the Amazon. Yansura's panel will bring together experts from across national government and civil society, including Duban Canal of the Amazon Alliance for Reducing the Impacts of Gold Mining, the Environmental Investigation Agency's Romain Taravella, and Vice Minister Mauricio Cabrera Leal of Colombia's Environment Ministry.

About the FACT Coalition

The Financial Accountability and Corporate Transparency (FACT) Coalition is a non-partisan coalition of more than 100 state, national, and international organizations working toward a fair and honest tax system that addresses the challenges of a global economy and promotes policies to combat the harmful impacts of corrupt financial practices.

For more information, visit www.thefactcoalition.org

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